A22.0004 Computers in Principle and Practice

Assignment 6

Assignment 6

In order to really increase your newsletter business, you are going to
need to buy a color laser printer. Your consultant tells you that if you
have a good color printer, you should be able to clear $250 profit every
week, if you continue to sell your newsletter at $1.25 a copy.

Your dad is willing to loan you the money, providing you pay it back
in 26 weekly payments, starting one week after the loan. However, dear old
dad will charge you 0.5% interest per week (a yearly rate of 26%). You would
be better off using a credit card, but you don't have one. So, you will
make 26 payments of $250 each (using all of your profit to pay back the
loan) for a total of $6500. However, because of the interest due, you won't
be able to borrow the full $6500.

Part A.

First, you need to demonstrate how the PMT function is used in this example.
The total loan principal you can borrow in this situation is $6,081. Use
the PMT function in Excel to verify this number and show the results as
in the upper left-hand corner of this example.

Part B.

Next, using the information in this web page
as a guide, construct a spreadsheet that shows the week number, the
amount owed at the start of the week, the interest charged by dad during
the week (which will be 0.5% of the amount owed at the start of the week),
and the amount owed at the end of the week after the $250 payment. Note
that the amount owed at the end of the week is the amount owed at the start
of the week plus the amount of interest for the week less the $250 paid
at the end of the week. (If this sounds confusing, read the formulas carefully
and follow them through step by step to see how it works.) Show this information
for all 26 weeks. Note that the amount owed at the end of the week should
be the same as the start of the next week. If you have done everything correctly,
the amount owed at the end of the 26th week should be zero. Hurrah!

Part C.

Now construct a chart to plot the amount owed at the start of each week
as a function of the week number. You might want to add a 27th
week, since at the start of the 27th week the amount owed is
zero. Put labels on the chart, and title the chart.

Print out a spreadsheet with the chart showing on it. The chart will
look something like this. The spreadsheet should
show the computations for the 26 weeks, as in this
example.

Then print out the spreadsheet making the formulas visible, as in this example.

Turn in these three printouts: the table reflecting values; the graph
reflecting those values; and the table again, this time reflecting the formulas.
Be sure to include your name and section number in the headers.